Managing Leadership^®

Another classic (along with the writings of Mary Parker Follett) that has more to say to us as both citizens and managers than much of what has followed. We are going to look at this in two steps. Today, we’ll do a more or less straightforward review, explaining why the book should be read by anyone interested in economic systems and their relations to societal systems, prosperity, and even liberty. In the next post, we’ll take another look at it from the perspective of a practicing manager.

To begin with, it is necessary to point out two things about this book. First, it is eminently readable. For some reason people tend to think it’s a densely argued scholarly work and difficult to follow. But the truth is it’s a joy to read: engaging, clear, and just loaded with quotable passages - you’ll want to have your highlighter handy.

Second, it is vigorously argued. Professor Hayek wrote this book during World War Two. A distinct irony of this time was that many of the progressive thinkers in the West, at the same time that they decried the motives and actions of the Axis powers, seemed to find much to admire in the centrally planned and directed systems those powers used to administer their societies. Indeed, within a few years of the close of that war, the progressive elements in the United Kingdom had enacted a law authorizing the government to centrally control the labor market (fortunately, this was never actually implemented).

Progressives made the mistake of imagining that distinctions existed between centralized planning in despotic and in democratic societies, or, at least, that men of science and good will could be trusted to implement centrally planned societies for the universally acknowledged good of their members. Hayek saw that if there ever was a slippery slope to despotism, the imposition of authority by one person over another on the presumed basis of superior knowledge or wisdom was it.

So, be prepared for discussions of “progressivism” and “classic liberalism” that will seem uncannily relevant today. As he wrote them, he was impelled by his concern that a clear understanding of the ideas at issue was decidedly vital to the path - to serfdom or liberty - the world chose to trod after withdrawing, seemingly, from the brink of the abyss. But because we always seem to be dangerously nearing that crevice, you’ll find this a remarkably relevant and energizing read.

Hayek’s core concern is that the progressive impulse to centrally plan an economy or society in an effort to generate the greatest general welfare is inherently illiberal and unavoidably arbitrary. The assumption of superior knowledge, wisdom, or morality unleashes dynamics which lead to pressure on these progressive elites to accumulate more power in order to give effective expression in society to their munificence. After all,

There must be no spontaneous, unguided activity, because it might produce results which cannot be foreseen and for which the plan does not provide.

And:

The alarming thing about these suggestions [that the postwar UK government establish central control of labor] is not that they are made but that they are made in all innocence and regarded as a matter of course by decent people who are completely unaware of the moral enormity which the use of force for such purposes involves.

And:

From the saintly and single-minded idealist to the fanatic is often but a step.

These three quotations point to what the book is about: 1) the concern that central planning is perceived by so many as the most effective way to achieve social justice in outcomes, rather than merely in theoretical potential; 2) the presumption that a certain class of people know what social justice is; 3) the inescapable inclination in the pursuit of such arbitrarily defined and centrally expressed social justice toward either the assemblage of greater coercive power or abandonment of the experiment altogether; and 4) the danger that the false second choice in the previous item so often leads to those decent people being shouldered aside by others more ruthlessly determined to avoid failure.

Hayek covers the ground thoroughly in carefully crafted prose, building his argument with understanding and grace, but also with compelling intellectual force. He discusses the ideas and hopes behind the progressive instincts he so distrusts, and the effects of the favored prescription of planning on democracy and the rule of law. He explores how the idealist often becomes, or at least ultimately gives way to, the fanatic. In a uniquely timeless chapter, “The End of Truth,” he describes real-world Orwellian techniques used to propagandize progressive remedies; perhaps you will recognize some of these from current events. In discussing the insidious instinct to impose progressive concepts (especially central planning) on an international level, he has this to offer:

What these dangerous idealists do not see is that where the assumption of a moral responsibility involves that one’s moral views should by force be made to prevail over those dominant in other communities, the assumption of such responsibility may place one in a position in which it becomes impossible to act morally.

It seems that there is something in that truth for everyone everywhere along the political spectrum, today in particular, to note.

Hayek concludes the book by expressing his concern that we take constructive responsibility for our own circumstances, neither assigning their causes to our forebears nor foisting their consequences on our successors. As citizens, and as managers, we would do well to heed him:

We have little right to feel in this respect superior to our grandfathers; and we should never forget that it is we, the twentieth century, and not they, who have made a mess of things.

It doesn’t matter where you are on the political spectrum or the managerial ladder. Read this book. You will be both a better citizen and a better manager for it.